November monthly report (data analysis): New cotton market speeds up price

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November monthly report (data analysis)

Both the global economy and domestic economic data are showing signs of improvement, and financial market turmoil has intensified. New cotton picking and delivery were carried out smoothly, and the market volume gradually expanded. Textile and apparel exports continued to fall, and sales have improved.

I. Review of the cotton market

1. Domestic cotton prices have increased significantly. In November, new cotton gradually went on the market, but Xinjiang's new cotton has limited capacity, high cost, insufficient supply, and driven by funds. Commodity futures oscillated sharply, and cotton futures and spot prices rose sharply. On November 17, the settlement price of Zhengmian Futures' main contract was 16,085 yuan/ton, up 840 yuan/ton from the previous month, or 5.5%. The national cotton price index was 15,641 yuan/ton, up 318 yuan/ton from last month. 2.1%.

Recently, international cotton prices have oscillated as a whole in the financial commodity market, and overall performance has been strong. On November 17, 2016, the main contract settlement price of ICE cotton futures was 72.54 cents/lb, up 1.4 cents/lb, or 1.9%. The international cotton index (M) was 79.91 cents/lb, up 0.2 cents/lb, or 0.2%, and calculated at 1% tariff. The import cost of RMB was 13,937 yuan/ton (the exchange rate was calculated according to the customs exchange rate of 6.7326). The same), lower than the national cotton price B index (representing the mainland white cotton level 3 price) 1704 yuan / ton.

2. The price difference between cotton inside and outside is high, and the price difference between cotton yarns is still small. On November 17, India's domestic cotton price (S-6) was 74.72 cents/lb, down 3.27 cents/lb, down 4.2%. According to 1% tariff, the import cost of RMB was RMB 1,057/ton, compared with the national cotton. The price B index was 2584 yuan/ton lower; the domestic cotton price in Pakistan (standard grade of Karachi Cotton Association) was 70.24 cents/lb, down 0.68 cents/lb, or 0.95%, according to 1% tariff, and the import cost of RMB was 12299 yuan. / ton, compared with the national cotton price B index is 3,342 yuan / ton.

On November 14-18, 2016, the average daily price of 32 domestic carded cotton yarns was 22,875 yuan / ton, down 143 yuan / ton, down 6.2%; the average price of 30 domestic carded cotton yarns in India was 2.7 US dollars per week. /kg, unchanged from the previous month, the import cost of RMB is 22,413 yuan / ton, which is 462 yuan / ton lower than the domestic 32 carded cotton yarn; the average price of 30 carded cotton yarns in Pakistan is 2.84 US dollars / kg. Last month, it was flat, and the import cost of RMB was 22,554 yuan/ton, which was 321 yuan/ton higher than the domestic 32 carded cotton yarn.

3. October cotton imports 41,000 tons. According to the statistics of the General Administration of Customs of China, China imported 41,000 tons of cotton in October 2016, a decrease of 19,000 tons from the previous month, a decrease of 31.8%; a year-on-year decrease of 0.06 million tons, a decrease of 1.5%. From January to October 2016, China's accumulated cotton imports totaled 697,000 tons, a year-on-year decrease of 505,000 tons, a decrease of 42%. From September 2016 to October 2016, China imported 102,000 tons of cotton, an increase of 0.9 million tons, an increase of 9.7%.

4. Textile and apparel exports continued to decline. According to the latest statistics of the General Administration of Customs of China, in October 2016, China’s textile and apparel exports amounted to US$21.46 billion, a decrease of 5.73% from the previous month and a decrease of 9.28% from the same period last year. Among them, the export value of textiles (including textile yarns, fabrics and products) was US$8.6 billion, down 6.64% year-on-year; the export value of clothing (including clothing and clothing accessories) was US$12.86 billion, down 10.96% year-on-year. From January to October 2016, China's textile and apparel exports totaled US$222.561 billion, down 5.31% year-on-year, of which textile exports totaled US$88.132 billion, down 3.25% year-on-year; apparel exports totaled US$134.429 billion, down 6.62 year-on-year. %.

2. Summary of macroeconomic environment at home and abroad

1. Global economic data has picked up. The final US Markit manufacturing PMI in October was 53.4, the highest since October last year. According to data from the US Department of Labor, the number of new jobs in the non-agricultural sector was 161,000 in October, and the unemployment rate fell slightly from 5% in September to 4.9%. The final value of the Eurozone PMI was 53.5, an increase of 0.9 points from the previous month, the highest value in 33 months. The European Commission released the autumn economic outlook report, slightly raised the growth forecast for the euro zone and the EU economy this year, but lowered its expectations for next year. In 2016, the euro zone economy and the EU economy grew by 1.7% and 1.8% respectively; the euro zone in 2017 The economy grew by 1.5%, compared with 1.7% in 2018; the EU economic growth rate is expected to be 1.6% and 1.8% in the next two years. Japan was driven by exports. In the third quarter of this year, real gross domestic product (GDP) increased by 0.5% quarter-on-quarter and 2.2% year-on-year, achieving growth for the third consecutive quarter. In the third quarter, Japanese exports increased by 2% from the previous quarter, down 1.5% from the previous quarter, and imports fell 0.6% from the previous quarter, the fourth consecutive quarter of decline.

2. The domestic economy as a whole is improving. In October, the National Bureau of Statistics released a manufacturing PMI of 51.2, up 0.8 percentage points from the previous month, a 27-month high, and the sub-indexes all rebounded. In October, the Caixin Manufacturing PMI index was 51.2, which was in line with the official. China's industrial added value above designated size increased by 6.1% year-on-year in October, unchanged from the previous month. The value added of industrial enterprises above designated size increased by 6% year-on-year in January-October. In October, China’s total import and export value fell by 0.6%, of which exports fell by 3.2%; imports increased by 3.2%. In October, the total retail sales of consumer goods increased by 10% year-on-year, 0.7 percentage points lower than that in September, and the lowest growth rate in May this year. Power generation in October increased by 8% year-on-year, 1.2 percentage points faster than September. China's power generation in January-October increased by 3.9% year-on-year, and it increased by 3.4% from January to September. From January to October, the national fixed asset investment (excluding farmers) increased by 8.3% year-on-year, and the growth rate was 0.1 percentage points faster than that of January-September.

Third, the domestic and international cotton market supply and demand situation analysis (a) supply

1 . Global cotton supply situation

US: US cotton export sales completed 56% . According to the US Department of Agriculture, as of November 3, the net sales of US cotton in 2016/17 (shipped + unshipped) was 1.489 million tons, an increase of 602,000 tons year-on-year, and 56% of the USDA export forecast was completed, higher than 45% of the same period last year. US cotton shipments totaled 535,000 tons, an increase of 197,000 tons year-on-year, and completed 20% of USDA export forecast, up from 17% in the same period last year. As of November 3, the US cotton contracted volume in 2017/18 has reached 102,000 tons, still falling behind the 134,000 tons in the same period last year.

India: Cotton production is expected to increase and exports decline. According to the latest forecast of the Indian Cotton Advisory Committee CA B), India's cotton production in 2016/17 is expected to be 5.967 million tons, up 3.84% year-on-year. The main reason for the increase in cotton production is the monsoon rains, no pests, and high density in some areas. Planting. This year, India's cotton planting area was 157.5 million mu, a year-on-year decrease of 11.59%. It is estimated that India's cotton yield will increase by 17.46% this year, reaching 37.86 kg/mu, higher than last year's 32.25 kg/mu. In addition to the decline in production in southern Andhra Pradesh and the state of Telangana, production in other regions has increased overall. This year, the area of ​​non-GM cotton in India increased to 28.35 million mu, higher than last year's 17.92 million mu, and the area of ​​genetically modified cotton decreased to 129 million mu, down from 160 million mu last year. According to CAB forecasts, India's cotton exports are expected to decline in 2016/17 due to a 40% increase in cotton production in Pakistan, which reduces import demand. India's cotton exports are expected to be 850,000 tons, down from 1.173 million tons in the previous year. Indian cotton exports to China will remain stable or slightly reduced.

India: The Cotton Association believes that establishing long-term cotton reserves is not feasible. The Cotton Association of India (CAI) made it clear that it opposes the establishment of cotton stockpile stocks and urges the government to reject the domestic textile industry's proposal to call on Indian cotton companies to maintain cotton buffer stocks. Previously, the Indian textile industry called on Indian cotton companies to buy 119-136 million tons of cotton at the peak of the annual harvest, which was used as an inventory buffer and sold to cotton companies with actual demand from May to September each year. The Cotton Association of India said that the establishment of cotton buffer stocks for a certain group of the industry will lead to market distortions, triggering turmoil in other parts of the cotton industry chain, and the annual acquisition cost will reach trillions of rupees. If cotton prices fluctuate significantly, Indian cotton companies will suffer huge losses. In order to solve the problem of insufficient funds in the textile mills, it is entirely possible to find ways to allow the Reserve Bank of India and the Ministry of Finance to take appropriate measures instead of establishing cotton reserves through the channels of the banks. It is reported that the Indian government has already rejected a similar proposal to establish a strategic cotton reserve.

Australia: Low temperature and rainy weather has delayed cotton planting. According to foreign reports, this year Australia's cotton planting area increased to 7.8 million mu, which was 136% last year. The market expects Australian production to double, reaching more than 870,000 tons, but still lower than the record high of 1.15 million tons set in 2012. Australian cotton planting is underway in 2016. Affected by low temperature and rainy weather, planting in some areas was slightly delayed, and planting area in some areas was lower than expected. Despite this, the overall situation of Australian cotton production this year is still optimistic.

2 . Domestic cotton supply situation

Xinjiang cotton target price subsidy rules landed. On October 28, 2016, with the approval of the state, the autonomous region officially issued the Notice on Printing and Distributing the Implementation Plan for the Pilot Project of Cotton Target Price Reform in Xinjiang Uygur Autonomous Region in 2016. In 2016, 90% of Xinjiang's localities are subsidized according to production methods, and 10% are subsidized by area (only in southern Xinjiang). The target price of cotton in 2016 is 18,600 yuan per ton, which is 500 yuan lower than that in 2015.

The total production in 2016 is expected to be 4.877 million tons. According to the results of the cotton production monitoring system of the National Cotton Market Monitoring System in late October, the average yield of cotton in China in 2016 was 111.2 kg/mu, up 9.2% year-on-year, which was 0.8 percentage points lower than the survey results in August. According to the actual cotton planting area of ​​China, the temperature was 43.845 million mu. The total output is expected to be 4.877 million tons, a decrease of 6.5% year-on-year, which is 0.8 percentage points lower than the August forecast. The total output of the Yellow River Basin is estimated to be 660,000 tons, a decrease of 26.2% year-on-year. The total output of the Yangtze River Basin is expected to be 345,000 tons, a decrease of 37.4% year-on-year. The estimated total output of the northwest inland is 3.841 million tons, an increase of 3.2% year-on-year. The estimated total output of Xinjiang is 3.814 million. Tons, an increase of 3.9% year-on-year.

The new cotton market has accelerated. As of November 11, the national fresh cotton picking progress was 85.0%, down 6.9 percentage points year-on-year, down 6.0 percentage points over the past four years. The picking progress in Xinjiang was 83.8%; the national sales rate was 79.1%, down 0.8% year-on-year. The percentage of sales in Xinjiang is 90.8%. The national processing rate was 72.6%, up 6.5 percentage points year-on-year, of which Xinjiang's processing rate was 74.2%; the national sales rate was 17.5%, down 4.9 percentage points year-on-year, of which Xinjiang's sales rate was 16.1%. According to the estimated production of domestic cotton of 4.916 million tons (the forecast of the national cotton market monitoring system in August 2016), as of November 11, the country has sold a total of 3.305 million tons of seed cotton, which is a decrease of 526,000 tons, including Xinjiang seed cotton. Folded cotton 2.475 million tons; cumulative processing of lint 2,400,000 tons, a year-on-year decrease of 131,000 tons, including 2.134 million tons of processing lint in Xinjiang; cumulative sales of lint cotton 577,000 tons, a year-on-year decrease of 281,000 tons, of which Xinjiang sold 462,000 tons of lint.

The price of cotton gross weight in Xinjiang with good quality is close to 16,000 yuan/ton; the purchase price of inland seed cotton is mostly in the range of 3.5-3.8 yuan/kg, the spot transaction price is about 15500 yuan/ton, and the small cotton is about 15000 yuan/ton. The price of Xinjiang cotton, which is partially transferred to the mainland, is relatively high at around RMB 16,500/ton. It is understood that the freight rate of Aksu to Shandong Province in southern Xinjiang is used at 1070-1100 yuan / ton. Since November, the steam freight rate in Xinjiang has increased by 240-260 yuan / ton.

(2) Demand

1 . Global cotton demand situation

US: Imports of pure cotton and chemical fiber garments declined in the third quarter. In the third quarter of 2016, US chemical fiber apparel imports decreased by 3% year-on-year, the first decline in the past five years. Imports of cotton apparel decreased by 5.7% in the third quarter and by 2.9% in the second quarter. According to statistics, since 2011, the import volume of cotton garments in the United States has continued to decline. The import volume in the third quarter decreased by 4% compared with the same period in 2011, while the import volume of chemical fiber garments increased by 31%. In terms of import unit price, the unit price of pure cotton and chemical fiber clothing in the third quarter of 2016 was 2.58 US dollars / square meter, 3.31 US dollars / square meter, respectively, the decline was 4.2%, 3.4%. In order to limit the increase in costs, importers are more inclined to purchase cheaper chemical fiber products. Therefore, in terms of imports, the US cotton clothing imports in the third quarter of 2016 decreased by 17% compared with the same period in 2011, while chemical fiber clothing Imports rose by 27% year-on-year.

India: Pure cotton yarn production fell slightly year-on-year. From April to September in 2016/17, the output of Indian spun yarn reached 2.883 million tons, an increase of 1.1% compared with the same period of last year; the output of pure cotton yarn was 2.055 million tons, which was 1.9% lower than the same period of last year; the output of chemical fiber was 698,000 tons. Compared with the same period of last year, the growth rate was 7.7%; the output of chemical fiber filaments was 574,000 tons, which was 1.2% lower than that of the same period of last year. Since 2012/13, the yarn production in India has continued to grow, and the growth trend of pure cotton yarn production is stable. Line production has been lowered. In 2015/16, the total output of Indian spun yarn was about 5.665 million tons, and the total output of pure cotton yarn was 4.138 million tons.

2 . Analysis of domestic consumption situation

In October and November, the sales of textiles and garments improved, the growth rate of industrial added value rebounded, the production and sales of yarns and cloths were relatively smooth, and the stocks of raw materials of textile enterprises declined, and the demand for replenishment increased slightly.

Textile and apparel retail sales have improved slightly. According to the National Bureau of Statistics, in October 2016, the total retail sales of clothing, shoes, hats and needles increased by 7.5% year-on-year, 0.8 percentage points higher than the previous month, down 2.3 percentage points from the same period of the previous year, and online sales of “wearing” goods increased by 17.1. %, an increase of 0.8 percentage points from the previous month and a decrease of 7.3 percentage points from the same period of the previous year. According to the statistics of the China National Business Information Center, the clothing retail sales in October increased by 5.8% year-on-year, driven by the 11th Golden Week Festival and earlier this winter. The growth rate was 3.9 percentage points faster than the same period of the previous year. High monthly growth rate.

In 2016, “Double Eleven” made another great achievement. The industry conservatively estimates that this year's "Double Eleven" mainstream e-commerce turnover will exceed 200 billion yuan, an increase of more than 30% over last year. Textile and garments also performed well, and the UNIQLO flagship store was the brand that Tmall "Double 11" reached the billion-dollar sales this year.

According to the National Bureau of Statistics, in October 2016, the added value of the textile industry above designated size increased by 4.8% year-on-year, 0.8 percentage points lower than the same period of the previous year and 1.5 percentage points higher than the previous month.

Affected by the Fed’s interest rate hike expectations, the central parity of the RMB against the US dollar continued to fall in November, repeatedly falling below the key barrier and hitting a record low. The fall of the RMB exchange rate is expected to promote China's textile and apparel exports, but the rapid exchange rate fluctuation is not conducive to the stability of the industry.

The yarn production and sales rate has increased. According to the survey of the national cotton market monitoring system, as of November 9, the production and sales rate of the sampled enterprises was 99.2%, an increase of 3.1 percentage points from the previous month and an increase of 2.2 percentage points year-on-year; the inventory was 13.9 days of sales, an increase of 0.6 days from the previous month. Reduced by 3.6 days. The production and sales rate of cloth was 97.6%, a decrease of 3.7 percentage points from the previous month and an increase of 6.3 percentage points year-on-year; the inventory was sales volume of 37.3 days, an increase of 2.7 days from the previous month and a decrease of 8.7 days from the same period last year.

Inventories of raw materials for textile enterprises have declined. With the gradual consumption of reserve cotton in the previous auction, the raw material inventory level of textile enterprises declined overall. According to the sample survey of the national cotton market monitoring system, as of November 9, the average inventory use days of the sampled enterprises were about 31.1 days (including arrival in Hong Kong). The number of imported cotton) decreased by 5.7 days compared with the previous year and increased by 0.9 days. According to relevant data, the national cotton industry's inventory was about 466,000 tons, a decrease of 15.6% from the previous month and an increase of 2.8% from the same period last year.

According to the survey of purchase intentions, in early November 2016, 70% of enterprises preparing raw materials for purchase increased by 1% from the previous month; those with a wait-and-see attitude accounted for 26%, an increase of 1% from the previous month; and those who did not plan to purchase cotton accounted for 4%. The chain ratio was reduced by 2 percentage points.